BILL NUMBER: SB 1979	CHAPTERED  09/29/00

	CHAPTER   894
	FILED WITH SECRETARY OF STATE   SEPTEMBER 29, 2000
	APPROVED BY GOVERNOR   SEPTEMBER 28, 2000
	PASSED THE SENATE   AUGUST 31, 2000
	PASSED THE ASSEMBLY   AUGUST 31, 2000
	CONFERENCE REPORT NO.   1
	PROPOSED IN CONFERENCE   AUGUST 28, 2000
	AMENDED IN ASSEMBLY   JULY 3, 2000
	AMENDED IN ASSEMBLY   JUNE 19, 2000
	AMENDED IN SENATE   MAY 9, 2000
	AMENDED IN SENATE   APRIL 24, 2000
	AMENDED IN SENATE   MARCH 29, 2000

INTRODUCED BY   Senators Escutia and Polanco
   (Coauthors:  Senators Karnette and Solis)
   (Coauthors:  Assembly Members Gallegos, Havice, and Lowenthal)

                        FEBRUARY 25, 2000

   An act to amend Sections 60231, 60315, and 60316 of, to add
Sections 60230.5 and 60328.1 to, and to add Chapter 5 (commencing
with Section 60290) to Part 5 of Division 18 of, the Water Code,
relating to water.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1979, Escutia.  Water replenishment districts.
   (1) The Water Replenishment District Act provides for the
formation of water replenishment districts and grants specified
authority to those districts.
   This bill would revise provisions regarding the constructing,
leasing, purchasing, or contracting for a capital improvement
project.  The bill would impose requirements regarding district
contracts, a reserve for the purchase of water, audited financial
statements, and estimated reserve funds.  The bill would require the
district to apply the estimated yearend balance in excess of a
prescribed amount to a replenishment assessment rate reduction or to
the  purchase of water in the succeeding fiscal year.
   By imposing additional duties on a water replenishment district,
the bill would impose a state-mandated local program.  The bill would
provide that its provisions shall only become operative if AB 1834
is enacted and becomes effective on or before January 1, 2001.
  (2) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state.  Statutory provisions establish procedures for making that
reimbursement, including the creation of a State Mandates Claims Fund
to pay the costs of mandates that do not exceed $1,000,000 statewide
and other procedures for claims whose statewide costs exceed
$1,000,000.
   This bill would provide that, if the Commission on State Mandates
determines that the bill contains costs mandated by the state,
reimbursement for those costs shall be made pursuant to these
statutory provisions.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 60230.5 is added to the Water Code, to read:
   60230.5.  All expenditures for construction work, materials,
equipment and supplies, and professional services, including, but not
limited to, legal, legislative, public affairs, public relations,
and engineering services, regardless of price shall be made pursuant
to contract.  All district contracts shall be in writing in a form
prescribed by the general manager and approved by the general
counsel.  At minimum, each contract shall include the relevant scope
of work, duration, and terms of payment.
  SEC. 2.  Section 60231 of the Water Code is amended to read:
   60231.  (a) The powers and duties herein enumerated, except as
otherwise expressly provided, shall be exercised and performed by the
board of the district.  If an existing agency has facilities
available and adequate to accomplish any part of the purposes of a
district created under this act, the district shall investigate and
determine the cost of contracting for the accomplishment of that
purpose through that existing agency.  Thereupon, the board shall
make a finding , by resolution and supported by evidence, whether or
not the purpose proposed to be accomplished by the district can be
achieved more economically and for the best interests of the area to
be benefited by entering into such a contract with an existing
agency.  If the board finds that such contract is more economical and
for the best interests of the area to be benefited, it shall so
contract for the accomplishment of said purpose, if such agency so
agrees.  The purpose of this section is to avoid duplication of
similar operations by existing agencies and replenishment districts.

   (b) Prior to constructing, leasing, purchasing, or contracting for
a capital improvement project, a district shall determine the
feasibility of such a project by ordering or preparing and reviewing
a cost-benefit analysis based upon reasonable assumptions.
  SEC. 3.  Chapter 5 (commencing with Section 60290) is added to Part
5 of Division 18 of the Water Code, to read:

      CHAPTER 5.  DISTRICT RESERVES AND ACCOUNTING

   60290.  The district may establish an annual reserve fund in an
amount not to exceed ten million dollars ($10,000,000) commencing
with the 2000-01 fiscal year.  The maximum allowable reserve fund may
be adjusted annually commencing with 2001-02 fiscal year to reflect
percentage increases or decreases in the blended cost of water from
district supply sources.  A minimum of 80 percent of the reserve
shall be for water purchases.
   60291.  The limitation on the reserve established in Section 60290
does not apply to the unexpended balance of any appropriated funds
in a capital improvement project construction account established to
pay the cost of a project or projects under construction.
   60292.  (a) The district shall order, review, and maintain on file
an independent, audited financial statement not later than 60 days
from the conclusion of the district's fiscal year.  The independent
audited financial statement shall be prepared by a certified public
accountant or a public accountant, licensed by the California Board
of Accountancy.  The independent audited financial statement shall be
consistent with standards provided in the "Standards for Audits of
Governmental Organizations, Programs, Activities, and Functions"
prepared by the Comptroller General of the United States.  The
independent audited financial statement shall include all of the
following:
   (1) The balances in all accounts established for the maintenance
of the district's funds.
   (2) A report describing the amount of district funds to be
expended for any capital improvement project authorized to be
constructed or funded by the district and a detailed description of
the capital improvement project.
   (3) A report detailing the source of funds to be expended on any
authorized capital improvement project, and whether the source of
funds is the water replenishment assessment levied in accordance with
Part 6 (commencing with Section 60300).
   (4) A report describing the propriety of the district's operating
expenses.
   (5) A summary of independent audited financial statement
exceptions and management improvement recommendations.
   (6) A description of correction or plan of correction shall be
incorporated in the independent audited financial statement,
describing the specific actions that are planned to be taken, or that
have been taken, to correct the problem identified by the auditor.
The descriptions of specific actions to be taken or that have been
taken shall not solely consist of general comments such as "will
implement," "accepted the recommendation," or "will discuss at a
later date."
   (b) Copies of the independent audited financial statements shall
be submitted to the Governor, the Legislature, and the State Auditor
on or before November 1 of each year.
  SEC. 4.  Section 60315 of the Water Code is amended to read:
   60315.  Upon completing the hearing, but no later than the second
Tuesday in May, the board shall, by resolution, find all of the
following:
   (a) The annual overdraft for the preceding water year.
   (b) The estimated annual overdraft for the current water year.
   (c) The estimated annual overdraft for the ensuing water year.
   (d) The accumulated overdraft as of the last day of the preceding
water year.
   (e) The estimated accumulated overdraft as of the last day of the
current water year.
   (f) The total production of groundwater from the groundwater
supplies within the district during the preceding water year.
   (g) The estimated total production of groundwater from the
groundwater supplies within the district for the current water year.

   (h) The estimated total production of groundwater from the
groundwater supplies within the district for the ensuing water year.

   (i) The changes during the preceding water year in the pressure
levels or piezometric heights of the groundwater contained within
pressure-level areas of the district, and the effects thereof upon
the groundwater supplies within the district.
   (j) The estimated changes during the current water year in the
pressure levels or piezometric heights of the groundwater contained
within pressure-level areas of the district, and the estimated
effects thereof upon the groundwater supplies within the district.
   (k) The quantity of water that should be purchased for the
replenishment of the groundwater supplies of the district during the
ensuing water year.
   (l) The source and estimated cost of water available for the
replenishment.
   (m) The estimated costs of replenishing the groundwater supplies
with the water so purchased.
   (n) The estimated costs of purchasing, in water years succeeding
the ensuing water year, that portion of the quantity of water which
should be purchased for the replenishment of the groundwater supplies
of the district during the ensuing water year, but which is
estimated to be unavailable for purchase during the ensuing water
year; estimated costs shall be based on the estimated price of water
for replenishment purposes during the ensuing water year.
   (o) The estimated rate of the replenishment assessment required to
be levied upon the production of groundwater from the groundwater
supplies within the district during the ensuing fiscal year for the
purposes of accomplishing the replenishment and providing a reserve
fund to purchase in future years, when available, that portion of the
quantity of water which should be purchased for the replenishment of
the groundwater supplies of the district during the ensuing water
year, but which is estimated to be unavailable for purchase during
that ensuing water year.
   (p) Whether any contaminants should be removed from groundwater
supplies during the ensuing fiscal year, and whether any other
actions under Section 60224 should be undertaken during the ensuing
fiscal year, the estimated costs thereof, and the estimated
additional rate of replenishment assessment required to be levied
upon the production of groundwater from the groundwater supplies
within the district during the ensuing fiscal year for those
purposes.
   (q) Whether any program for removal of contaminants or other
actions under Section 60224 should be a multiyear program or is a
continuation of a previously authorized multiyear program.
   (r) The amount, if any, by which the estimated reserve funds on
hand at the end of the current fiscal year will exceed the annual
reserve fund limit determined pursuant to Section 60290.
  SEC. 5.  Section 60316 of the Water Code is amended to read:
   60316.  Based on the findings pursuant to Section 60315, the board
shall, by resolution, determine all of the following:
   (a) What portion, if any, of the estimated cost of purchasing
water for replenishment for the ensuing fiscal year shall be paid for
by a replenishment assessment.
   (b) What portion, not exceeding 25 percent of the above portion,
of the estimated cost of purchasing in the future that quantity of
water which should be purchased during the ensuing water year, but
which is estimated to be unavailable during that year, shall be
raised by a replenishment assessment.
   (c) What portion of the estimated costs of removing contaminants
from groundwater supplies and of taking other actions under Section
60224 during the ensuing fiscal year shall be paid for by a
replenishment assessment.
   (d) What portion, if any, of the cost of a capital improvement
project for replenishment purposes shall be paid for by a
replenishment assessment.
   (e) What portion, if any, of the cost of a capital improvement
project undertaken pursuant to Section 60224 shall be paid for by a
replenishment assessment.
  SEC. 6.  Section 60328.1 is added to the Water Code, to read:
   60328.1.  The district shall apply the estimated fiscal yearend
balance in excess of the amount permitted in Section 60290 to a
replenishment assessment rate reduction or to the purchase of water
in the succeeding fiscal year.
  SEC. 7.  Notwithstanding Section 17610 of the Government Code, if
the Commission on State Mandates determines that this act contains
costs mandated by the state, reimbursement to local agencies and
school districts for those costs shall be made pursuant to Part 7
(commencing with Section 17500) of Division 4 of Title 2 of the
Government Code.  If the statewide cost of the claim for
reimbursement does not exceed one million dollars ($1,000,000),
reimbursement shall be made from the State Mandates Claims Fund.
                    enacted and
  SEC. 8.  This act shall only become operative if Assembly Bill 1834
of the 1999-2000 Regular Session is enacted and becomes effective on
or before January 1, 2001.
